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Does Agricultural Growth Matter in Poverty Alleviation?

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  • Raghav Gaiha

Abstract

This article uses a panel survey of households in the Indian state of Maharashtra to demonstrate that agricultural growth takes too long to trickle down to the rural poor. Unanticipated inflation, on the other hand, aggravates rural poverty, as does domination of the agricultural growth process by large landholders. This affects the poor through the oligopsonistic influence of the landholders in rural labour markets, dampening employment and wages (as compared with the outcome in a competitive market). In the context of structural adjustment, while the emphasis on allocative efficiency through withdrawal of input subsidies and remunerative prices for output is justified, acceleration in agricultural growth by itself is unlikely to make a dent in rural poverty. Measures designed to accelerate agricultural growth must therefore be supplemented by direct anti‐poverty interventions. Consumer price stabilization is particularly important, and would be assisted by an overhaul of the Public Distribution System. Major reforms would include improved flexibility in the scale of the PDS, better targeting through alternative distribution networks when private trade channels are weak or non‐existent, and simplification of registration procedures. The oligopsonistic role of large landholders could be curbed through market‐mediated land redistribution, scrapping of all tenancy regulations when tenancy markets function efficiently, and through large‐scale intervention in rural labour markets along the lines of the Employment Guarantee Scheme.

Suggested Citation

  • Raghav Gaiha, 1995. "Does Agricultural Growth Matter in Poverty Alleviation?," Development and Change, International Institute of Social Studies, vol. 26(2), pages 285-304, April.
  • Handle: RePEc:bla:devchg:v:26:y:1995:i:2:p:285-304
    DOI: 10.1111/j.1467-7660.1995.tb00553.x
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    1. Sah, Raaj Kumar & Srinivasan, T. N., 1988. "Distributional consequences of rural food levy and subsidized urban rations," European Economic Review, Elsevier, vol. 32(1), pages 141-159, January.
    2. Raghav Gaiha, 1992. "On the chronically poor in rural India," Journal of International Development, John Wiley & Sons, Ltd., vol. 4(3), pages 273-289, May.
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    6. Gaiha, Raghav & Deolalikar, Anil B, 1993. "Persistent, Expected and Innate Poverty: Estimates for Semi-arid Rural South India, 1975-1984," Cambridge Journal of Economics, Oxford University Press, vol. 17(4), pages 409-421, December.
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    Cited by:

    1. Ryan, James G., 2002. "Agricultural Research and Poverty Alleviation: Some International Perspectives," Working Papers 118375, Australian Centre for International Agricultural Research.
    2. Peter Warr & Waleerat Suphannachart, 2021. "Agricultural Productivity Growth and Poverty Reduction: Evidence from Thailand," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(2), pages 525-546, June.
    3. Raghav Gaiha & Vani Kulkarni & Manoj Pandey & Katsushi Imai, 2009. "National rural employment guarantee scheme, poverty and prices in rural India," Economics Discussion Paper Series 0908, Economics, The University of Manchester.
    4. Varsha S Kulkarni & Raghav Gaiha, 2018. "Beyond Piketty: a new perspective on poverty and inequality in India," Global Development Institute Working Paper Series 332018, GDI, The University of Manchester.
    5. Simrit Kaur, 2014. "Food entitlements, subsidies and right to food: a South Asian perspective," Chapters, in: Raghbendra Jha & Raghav Gaiha & Anil B. Deolalikar (ed.), Handbook on Food, chapter 19, pages 482-514, Edward Elgar Publishing.
    6. Kapur Mehta, Aasha & Shah, Amita, 2003. "Chronic Poverty in India: Incidence, Causes and Policies," World Development, Elsevier, vol. 31(3), pages 491-511, March.
    7. Katsushi Imai & Raghav Gaiha & University of Delhi, 2003. "Millennium Development Goals, Agricultural Growth and Openness," Economics Series Working Papers 161, University of Oxford, Department of Economics.
    8. Gaurav Datt & Martin Ravallion, 1998. "Farm productivity and rural poverty in India," Journal of Development Studies, Taylor & Francis Journals, vol. 34(4), pages 62-85.
    9. Raghav Gaiha & Katsushi Imai, 2004. "Vulnerability, shocks and persistence of poverty: estimates for semi-arid rural South India," Oxford Development Studies, Taylor & Francis Journals, vol. 32(2), pages 261-281.
    10. Amita Shah, 2006. "Poverty in Remote Rural Areas in India: A Review of Evidence and Issues," Working Papers id:713, eSocialSciences.
    11. Alam, S.B. & Nasrin, M.A., 2007. "Role Of Agriculture In Reducing Poverty Of Bangladesh," Bangladesh Journal of Agricultural Economics, Bangladesh Agricultural University, vol. 30(1), pages 1-16, June.
    12. Lee, Hiro & Roland-Holst, David, 2000. "Trade and Transmission of Endogenous Growth Effects: Japanese Economic Reform as an Externality for East Asian Economies," Conference papers 330892, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    13. Kulkarni, Varsha S. & Gaiha, Raghav, 2021. "Beyond Piketty: A new perspective on poverty and inequality in India," Journal of Policy Modeling, Elsevier, vol. 43(2), pages 317-336.
    14. Dibyendu Maiti & Chiranjib Neogi, 2020. "Endogeneity Corrected Stochastic Frontier with Market Imperfections," Working papers 313, Centre for Development Economics, Delhi School of Economics.
    15. Mustafa K. Mujeri, 2000. "Poverty Trends and Growth Performance: Some Issues in Bangladesh," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(4), pages 1171-1191.
    16. R Gaiha & K Imai, 2005. "A Review of the Employment Guarantee Scheme in India," Economics Discussion Paper Series 0513, Economics, The University of Manchester.
    17. Raghbendra Jha & Raghav Gaiha & Anurag Sharma, 2006. "Mean Consumption, Poverty and Inequality in Rural India in the Sixtieth Round of the National Sample Survey," ASARC Working Papers 2006-11, The Australian National University, Australia South Asia Research Centre.

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